Early GST Implementation: Common Billing Issues Observed
The initial rollout of India's Goods and Services Tax (GST) revealed immediate challenges in billing practices, particularly within the food and beverage sector. Many restaurants struggled to correctly display the bifurcation of Central GST (CGST) and State GST (SGST) on customer invoices, despite often charging the correct total tax. This lack of transparency caused widespread consumer confusion and highlighted the need for businesses to adapt their systems to meet new compliance requirements.
Early GST Implementation: Common Billing Issues Observed
At the stroke of midnight on June 30th, the Goods and Services Tax (GST) officially commenced in India, a reform Prime Minister Modi referred to as the "Good and Simple Tax." The fact that this significant fiscal policy shift occurred on a Saturday provided an opportunity for observation and analysis. Across the nation, a unique pattern emerged in the invoices being generated, signaling the initial adjustments of the economy.
Inconsistent Restaurant Invoicing Practices
Observers quickly noticed that not all restaurants were issuing invoices correctly, particularly concerning the new tax structure. While many establishments were applying the appropriate tax amounts, their billing interfaces often failed to display the correct breakdown. Prior systems, designed for a single VAT charge, struggled to adapt to the requirement of showing both Central GST (CGST) and State GST (SGST) charges separately.
Some restaurants had not yet updated their online platforms to reflect the new tax rates and their bifurcation. Consequently, certain invoices either displayed only CGST or SGST, or vaguely labeled the charge as "Taxes" without a clear division. This inconsistency was frequently observed in mobile ordering applications.
According to GST regulations, the tax levied on food delivery should be split into two components: the state portion (SGST) and the central portion (CGST). The applicable tax rate varies depending on whether the restaurant is air-conditioned or non-AC, with the total GST being equally distributed between these two heads. Despite this clear guideline, many online platforms appeared unfamiliar with the detailed breakdown requirements, often defaulting to a generic "taxes" label.
Even though calculations might reveal that the total tax charged was correct, the lack of a transparent tax breakup caused considerable confusion among consumers, leading to widespread discussion on social media. Customers often wondered if they were being overcharged due to the unclear itemization on their bills.
Initial GST implementation presented challenges beyond system updates. There was also some uncertainty regarding the precise tax rates to be applied. For instance, a local eatery might incorrectly apply an 18% GST, while a high-end AC pizzeria might question if 12% was sufficient. To clarify these ambiguities, specific GST rates were provided for the food and beverage sector.